Reasons to Cash Up on The Silver Supply Crunch
In June 2020, silver prices surged and made it the best performing precious metal in the market. The production of silver metal has been extremely affected by mining suspensions owing to the coronavirus pandemic.
Out of all other precious metals, silver has taken the hardest hit and in April 2020, almost 65.8% of yearly global silver production was paused, thereby severely decreasing silver output and creating a supply constraint.
When there is not enough silver to meet the growing demands, this puts pressure on the market and the prices of silver surge.
Decrease in Silver Production
Prior to the pandemic, silver mining experienced difficulties due to declining rates at many large silver mines.
In 2019, silver mining decreased for the fourth consecutive year by 1.3% and experts predict that it will continue dropping due to coronavirus lockdowns.
Supply constraints lead to increase in the price of silver and in June 2020, it surged to a three month high of 17.51$ per ounce.
In the last few months of the same year, the prices of silver declined but experts forecasted that they would increase in the coming months.
Increase in Prices of Silver
Analysts at CIBC forecasted that the price of silver will increase from $18.00 to $19.00 in 2021. The Silver Institute researchers have also corroborated this fact.
The global demand for silver continues to increase and, in 2019, it rose from 988.3 million ounces to 991.8 million ounces.
More people invested in silver in the last year and investor demand climbed upto 12%, amounting to 186.1 million ounces. This increase was the highest jump in silver metal investing since 2015.
Exchange-traded products in silver also increased their holdings by 13% which is their largest annual growth since 2010.
While experts believe that demand for silver jewelry and silverware will decrease due to the pandemic, the physical investments in silver are expected to rise to a projected 16%.
Invest in Silver for High Returns
Investing in silver when there is a supply constraint is a beneficial decision which can yield high returns. The silver crunch is happening right now, and many investors are hoping to pile up on their precious metals so that when the silver prices boom, they can get great returns.
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